RETALIATION AND "DUMPING." [To TER EDITOR OF TER "SPRCTAT011.1
Sin,—Events are moving rapidly with us since Mr. Chamber- lain left Birmingham on his educational mission. Many seem to forget, others deliberately ignore, that there is only one policy put before the country by its Government,—the policy of retaliation. But there are some who have found safety, if not salvation, in that policy because they are not willing, or have not been "educated," to take the plunge into Protection, and yet think that "something must be done." It is to this policy, as expounded by Mr. Balfour, that I wish to confine myself.
The chief considerations brought forward as demanding a change in our fiscal system are,—(1) that we are being shut out of protected countries by high tariffs, and (2) that some of these same countries invade us " unfairly " by the procedure known as "dumping." These, I submit, are two separate and distinct things. The one is protection of the foreigner's own home market; the other is aggression on our market. The one is a national policy, deliberately embraced and conscientiously believed in by foreign Governments ; the other is the action of individuals pursuing their own private interests. There have been as high tariffs in other countries without "dumping," and many protected countries to-day do not "dump " ; we, again, for years have been denounced by other nations as "dumpers," although we have no Protective tariffs at all. There is. of course, a close connection at the present time between the two since the emergence of the Trust, with its policy of securing the economies of vast produc- tion and selling abroad the surpluses which otherwise would "spoil" the limited market at home. But Protection and "dump- ing "are clearly two distinct things. "Dumping," in fact, is a con- comitant of large production everywhere, and has been practised within countries far more widely than ever between countries. It is only emphasised by the secondary effect of Protection on the formation of Trusts. By Protection monopoly is favoured, inas- much as foreign competition is shut out. By the Trust this monopoly is confirmed, inasmuch as the independent home pro- ducer is shut out. This double monopoly secures high prices and high profits, and so leaves a large margin for selling in certain markets at home and abroad under cost.
Both these evils—the exclusion from foreign markets and the invasion of our home market—are, it is said, to be met by the one policy called retaliation. They are placed together by Mr. Balfour, and, probably, if it had not been for this new growth of "dumping," Mr. Balfour would not have brought forward his policy at all. The question which has been perplexing me is in what way retaliation—a national measure—is to be used as a remedy for "dumping"—an incident of individual competition ; ‘nd I wanted to see how far those who used the word had any clear ideas as to what they meant by it. So I put the question in a letter which appeared in several of the leading newspapers:
"How is our Government to take effective measures against the actions of individuals not recognised by their Government ? " The answer I got was the answer I expected,—accompanied, of course, with the usual sneer at the childishness of "the fourteen Professors." It was that the way to stop " dumping " was to put a tax on the "dumped" articles.
Precisely. But why is this called retaliation ? What the ordinary merely academic person means by retaliation is "hitting back," and, as one who, before he became a Professor, was for many years member of a trade where cutting of prices was one of the commonest incidents, I venture to say that this is what the business man means by it. The "negotiation," as Mr. Balfour pleasantly calls it, usually took this form :—" You are underselling us in X, where you have a small trade and we have a large one. It doesn't hurt you much, but it is serious to us. If you don't stop it, we shall go to Y, where you have the trade and we have very little, and cut prices 30 per cent. or so. This won't hurt us, but it will be very serious to you." That, I say, was retaliation, and, as between a small firm and a large, it was very effective. There was simply no answer to it—on the part of the small one. As between two large firms, however, it usually involved a bitter war of cutting prices, much bad feeling —we used to " cut " each other in the street, and our wives were forbidden to call—and great loss to both parties and to the whole trade.
What I wanted to find out was if the advocates of inter- national retaliation meant this or anything like this ; if, perhaps, they contemplated some method of Government subsidy, by which we could attack some large, and therefore vulnerable and sensitive, trade of other nations without much injuring ourselves. And the answer I get from every one who has done me the cora- pliment of replying is that retaliation means, not a counter- attack, but simple defence. America and Germany "dump" steel on us ; we are to answer by putting a duty on American and German steel. May one ask in what this differs from the old- fashioned Protection of the steel industry ? If it does not differ, then I submit that retaliation has overshot its mark as regards "dumping." It stops the " unfair " competition, but it does a great deal more. It presumably aims at securing our manu- facturers against loss,—against being obliged to meet "dumping," and bring down the home prices to, or under, cost. What it does is to secure them in a quasi-monopoly profit, by giving them the power to raise home steel by something under the amount of the retaliatory duty. What I think we must ask, then, is : Is Mr. Balfour's retaliation, after all, anything different from Mr. Chamberlain's undisguised protection of home manufactures?
The University, Glasgow.
[Professor Smart's treatment of the " dumping " problem is most valuable. In truth, " dumping " is merely a vituperative description of a form of competition which, like all com-
petition, is disliked by those subject to it.—En. Spectator.]
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